The world is currently in a state of lockdown with a pandemic looming on its head. The COVID-19 situation has now become a crisis for corporates as well and not just the healthcare sector. The Ministry of Corporate Affairs (MCA) has stepped up to provide relief to companies already battling to survive this public health crisis. The MCA has launched the Companies Fresh Start Scheme, 2020 (CFSS).
The MCA has provided relief to LLPs by making certain changes in the LLP Settlement Scheme, 2020 as well. The motive behind these decisions was to provide a fresh pitch for all law abiding companies, giving them a bit of extended time and financial relief in this current global situation.
What does CFSS have in store for defaulting firms?
As per the Companies Act, 2013, all companies are requested to follow statutory compliances annually, which includes filing the annual return, financial statements and other important forms, documents, and statements that are specified within a specified time frame. Not adhering to these norms invites penalties and fines, and the firms who fail to do so are called as defaulting firms.
Companies Fresh Start Scheme, 2020 explained
These firms are required to pay only the normal fees as stated by the Companies Rules, 2014 for all filings with the MCA 21 registry. No additional fees will be charged from them.
Immunity against prosecution and proceedings for imposing penalty only where:
– The prosecution and proceedings arose due to the delay in filing of belated documents.
– No other cases covered.
In the scenarios where there is an existing appeal filed by the company against any notice, complaint or order issued with regard to prosecution and proceedings related to a delay in the statutory filing, the following steps are to be followed:
– Before registering under the CFSS 2020, the appeal filed by the company should be withdrawn.
– It is must for the company to present a copy of such withdrawal along with the application as a proof.
Where the order has been passed by the court and the company has not filed an appeal against the same as on the commencement of the scheme:
– A window of 120 days is provided to file an appeal before the Regional Director.
– During this period of 120 days, for the non – compliance of the order passed by the court with regard to the delay in filing of any documents for the same shall be excused and no further action shall be initiated against the company.
Form CFSS 2020 may be filed by the companies under the scheme. The form provides the firms with immunity for a period of 6 months after the date of closure of the CFSS 2020. No fees is therefore required to be paid on this particular form. An ‘Immunity Certificate’ shall be granted by the designated authority.
The company is not granted immunity when:
– An appeal is pending in the court against the company.
– In case of management disputes pending before any court of law.
– Where an order is passed by the court and no appeal has been made before the scheme came into force.
Extension granted to file DIR-3/DIR-3KYC: Extended timelines between April 1, 2020 and September 30, 2020 is provided by MCA for the directors’ whose DIN is deactivated to come forward and file DIR-3KYC/DIR-3 KYC-Web. The filing fee of Rs 5,000 will not apply.
 to ease the burden on corporates during the COVID-19 crisis.){kind=link}